Leading paint manufacturer formulates optimal supply-chain chemistrywith HP Services' .NET integration Akzo Nobel Coatings

Business need: Akzo Nobel Coatings is the world's leading producer ofcoatings and paints for cars, homes, boats, aerospace,wood, and metals. This division of Akzo Nobel sought toreplace its traditional purchase order system with anintegrated supply-chain-management solution tostreamline communications between its thousands ofsuppliers and customers. Its goals included reducing rawmaterials inventory, transportation costs, documenthandling – while increasing competitive advantages forAkzo Nobel Coatings and its suppliers and customers.

Solution overview: Akzo Nobel Coatings teamed with HP Services andMicrosoft to design, pilot, and implement a VendorManaged Inventory (VMI) solution based on reliable,flexible HP ProLiant servers and the Microsoft .NETstrategic framework. HP created an adaptive, globalsupply-chain management system, which integrates Akzowith its existing suppliers, enables cost reductions, andscales as new suppliers are added. Microsoft BizTalkServer, SQL Server, and BizTalk adapters, running onclustered ProLiant DL380 servers under Windows 2000,comprise the messaging hub for this globally accessiblesolution.

Supply chain shines with .NET baseAs a leading paint manufacturer, Akzo Nobel Coatingsrelies on thousands of global suppliers for raw materials –including solvents, pigments, binders, additives, resins,and packaging. Previously, these suppliers providedmaterial in response to traditional purchase orders,generated by Akzo Nobel Coatings as materialinventories ran low.

This largely manual supply-chain process required theproduction and handling of many thousands ofdocuments related to orders, shipping, and processing.Akzo Nobel Coatings wanted to automate the supply-chain-management process by providing a common,standards-based messaging infrastructure – one thatwould shift much of the responsibility for raw materialtracking, ordering, and delivery to suppliers.

The coating division's highly diversified global operations– including 29 business units – required a powerful,secure architecture to handle integration of disparatesupplier data flows. The electronic supply-chain-management project became know as P@CCESS(Procurement Akzo Nobel Coatings Common ElectronicSourcing Support). P@CCESS includes four sub-components:

• eProcurement – purchasing of supplies and services

• eAuctions – for price reduction on commodity goods

• eSupply Chain Integration – for purchasing ofstrategic goods

• eInfrastructure – for a common infrastructure for allof the above

Akzo Nobel Coatings chose the team of HP Services andMicrosoft to design, pilot and implement the eSupplyChain Integration and eInfrastructure portions ofP@CCESS. The division selected HP Services for HP'sexperience with global implementations of the Microsoft.NET framework; SAP connectivity experience and tools;superior knowledge of heterogeneous platforms, software,and applications; managed services offerings; andproven ProLiant server technology. Microsoft was alreadya strategic partner, as Akzo Nobel Coatings hadstandardized on Microsoft technology worldwide.

HP Services’ .NET team is catalyst for connectivityThe goal of the project was to provide the messaginginfrastructure and business-to-business connectivityrequired for VMI. The HP Services .NET integration teamused Microsoft .NET framework components, includingBizTalk Server, SQL Server, and Internet InformationServices, as well as BizTalk adapters for SAP R3developed by HP Services. The HP-developed SAP R3adapters are intelligent adapters and wrappers thatsupport direct and remote interfaces between BizTalk andother critical applications.

The HP Services .NET team worked closely with Microsoftand Akzo Nobel Coatings experts to provide anintegration infrastructure to accommodate disparate dataflows from multiple enterprise resource planning (ERP)systems and various document types, including eXtensibleMarkup Language (XML), SAP Edifact, and RosettaNet.The HP Services/Microsoft .NET team worked closely todocument key business requirements for the IT solution,and translated this into a comprehensive solutionarchitecture.

HP Services’ .NET consultants created a centralmessaging hub on a platform of clustered ProLiant DL380servers running Microsoft BizTalk Server and the adaptercomponents. The messaging hub connects each AkzoNobel Coatings site to its suppliers, performs all formatconversions and routes documents to the correctrecipients. In addition, HP Services developed a supplierWeb site using eSCL from Interface & Control Systems tostreamline order processing even further. eSCL is a toolsetfor e-business applications, which enables the building ofscalable, maintainable Web sites for business-to-business,business-to-customer, and Web-enabled systems.

The Web site allows for fast and early supplier adoptionby making it easy for suppliers to connect. Later, supplierscan establish a direct ERP link to the messaging hub fordirect and efficient communications. The intelligentmessaging hub converts all incoming messages to acommon industry format, the Chemical Industry DataExchange.

The new electronic supply-chain-management solutionachieved success in pilot testing with four suppliers andfour buyers in Europe. As of early 2004, 25 Akzo NobelCoatings sites in Europe and United States connect with44 suppliers, with the number of connections expandingrapidly. Akzo Nobel Coatings easily justified the costs ofthe VMI solution via expected return on investment fromreductions in raw materials inventories, purchasingadministration, transportation, and document processing.

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Teamwork pays offRecognizing HP's comprehensive .NET commitment andcapabilities, Microsoft endorses HP as a "worldwideprime integrator" for Microsoft .NET technologies, whichincorporate Microsoft's .NET connected software andHP's broad array of industry-leading technologyplatforms. In turn, HP names Microsoft .NET as its No.1application development platform for industry-standardHP ProLiant servers. Together, HP and Microsoft havecommitted to creating one of the world's largest, mostspecialized forces of .NET consultants and systemsarchitects who are enabling competitive advantages forenterprises.

Akzo Nobel Coatings is at the cutting edge in businesspractices and technology. The efficiency and adaptabilityof the division's new supply-chain-management solutionwill help the division maintain its leadership position anddeliver a competitive advantage for the company and itsbusiness partners.

About Akzo Nobel CoatingsWith 64,500 employees worldwide, Akzo Nobel(www.akzonobel.com) divides its global activities intothree divisions: Pharmaceuticals, Coatings, andChemicals. The Akzo Nobel Coatings division employs30,000 and operates in 60 countries. With 2003 salesof 5.2 billion Euros, the division is the world's leadingproducer of coatings and paints for cars, homes, boats,aerospace, wood, and metals.

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For more information on how working with HP can benefit you,contact your local HP representative, or visit us at www.hp.com.

© Copyright 2004 Hewlett-Packard Development Company, L.P. The information contained herein is subject tochange without notice. The only warranties for HP products and services are set forth in the express warrantystatements accompanying such products and services. Nothing herein should be construed as constituting anadditional warranty. HP shall not be liable for technical or editorial errors or omissions contained herein.

Microsoft and Windows are trademarks of Microsoft Corporation.

5982-7636EN, 7/2004

• Streamline communication and reduce

costs between Akzo Nobel Coatings and

thousands of current and potential

suppliers

• Reduce inventory, document handling, and

transportation costs with electronic supply-

chain integration

Hardware• Two clustered HP ProLiant DL380 servers

Software• Microsoft Windows 2000 professional

• Microsoft BizTalk Server

• Microsoft Internet Information Server

• Microsoft SQL Server

• SAP enterprise resource planning

applications

• eSCL from Interface & Control Systems,

Inc.

HP Services• Consulting and integration

• Architecture and pilot implementation

• Infrastructure rollout and expansion

• Anticipated ROI benefits fromsupply chain integration:

• Up to five times return on initial

investment and operation cost

• One-time reduction in inventories of 25 –

50 percent

• Less stock in the supply chain, coupled

with improved product availability

• Ongoing, annual five percent reduction

in transportation costs

• 20 percent annual savings in document

handling

• One-time saving of 65 million Euros on

invested capital

• Yearly savings of more than 10 million

Euros

• Standards-based infrastructure to handle

all current and future business-to-business

processes

• Supplier benefits:

• Integration of ERP systems with those of

Akzo Nobel Coatings offers advantage

over other suppliers

• Stronger partner position

• Lower costs

• Quicker turnaround on order processing,

improving customer satisfaction

Leading paint manufacturer formulates optimal supply-chain chemistrywith HP Services' .NET integration Akzo Nobel Coatings

Challenge Solution Results